Credibility with Clients

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Doug Lennick, CFP®, author of Financial Intelligence: How to Make Smart, Values-Based Decisions with Your Money and Your Life, addressed the Major Firms Symposium audience. He spoke about credibility in financial services, and called on planners and financial services companies to change the conversation.

He cited a recent study of affluent investors, which found that 27 percent of investors distrust their own financial adviser, 38 percent distrust financial advisers in general and 40 percent distrust the media. Even greater numbers distrust financial product providers.

In discussing the recent financial crisis, he pointed out that for clients, the question is not risk tolerance, it’s loss tolerance. Clients are happy to take as many risks as possible, as long as the risks always pay off. As a result, financial services companies are stuck in a cycle of selling what it’s emotionally easy for clients to buy. However, catering to that mentality makes clients vulnerable to the boom-bust cycle we’ve seen over the last decade or so. Rather, he said, the value proposition of this industry must be to help clients manage the certainty of uncertainty and provide an alternative to emotional investing.

“My expertise isn’t in knowing what will happen, it’s in preparing for not knowing what will happen,” said Lennick.

Mary Corbin
Senior Editor, Journal of Financial Planning
Managing Editor, FPA Press
Financial Planning Association

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